Form to comply with the US Treasury’s FBAR rule on foreign bank accounts is due soon.
The US Treasury continues to tighten up its tax laws. The latest issue that is notable for treasurers is an update on its Report of Foreign Bank and Financial Accounts (FBAR) rules. This would apply to bank account signers in other countries.
FBAR is part of the 1970 Bank Secrecy Act and requires any US person having a financial interest in, or signature or other authority over, a foreign financial account, including bank or brokerage accounts, mutual funds, trusts, or other type of foreign financial account. If a person does have “signature authority,” that person must file Form TD F 90-22.1 with the Internal Revenue Service. The new regulations are effective as of March 28, 2011, and apply to FBARs that are required to be filed by June 30, 2011.
So who exactly must file? Treasury requires each US person having:
- a financial interest in, or signature or other authority over, a bank, securities, or other financial account in a foreign country; and hasa
- an account with an aggregate value that exceeds $10,000 at any time during the calendar year to report such account to the IRS.
Treasury finalized the rules in February of this year after clarifying who is and isn’t required to file. The goal of the rules serves two purposes: one to root out any money laundering or cash used for illegal activities (i.e., terror, drugs, etc). Its other purpose is to ferret out money it feels individuals and corporations may be hiding from the IRS. This effort stems in part from a UBS tax evasion case in 2008 that accused the bank of holding billions of dollars in private accounts. In 2009, UBS admitted to actively helping its US clients evade taxes, and reportedly paid $780 million to settle that case.
That Treasury is cinching up its global tax rules comes as no surprise, as a wider effort to raise tax revenue from corporate overseas cash – whether by punitive or other means – is a top priority for the Obama Administration.